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Market Internals

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  #1 (permalink)
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Hello All,

I noticed that there isn't a thread on market internals. I was specifically curious if there are traders on futures.io (formerly BMT) using the $tick to aid in trade decisions. Things I'd like to know is do people fade $tick extremes, or enter on tick hooks ala Hubert Senters. Also, do you take into consideration where the ticks are spending most of their time, above or below zero?

If you use internals whether its the $tick, A/D etc. I'd be interested in hearing about how you incorporate them into your trading.

thank,

David

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I use to use TICK but I've given up until I have something that updates faster than 1 second. I also think it probly would make more sense to only look at TICK of the S&P 500.
Tick hooks and fading extremes to me are only good if you call the type of day correctly. Trying to fade TICK extremes on a big trend day is a terrible idea IMO.
Same thing with trying to play Tick hooks on a range bound day.

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When I've looked at TICK, I found it more helpful to use a moving average than the actual data, you might try it. I deleted the TICK bars themselves and just used the moving average.

Mike

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$TICK and TRIN are very useful indicators, if used correctly. Unfortunately, IMO, Senters and Carter give people information that can lead to big trouble in attempting to trade these internals, especially on the TICK.

Carter speaks of shorting a +1000 TICK with a 30 point stop and 20 point profit. As mentioned earlier in this thread, this approach will kill you every time if the trend is decided UP. Same on the reverse with -1000. He stops after 2-3 losers on the day, but who wants to loser $4500 before waking up to the fact that the strategy is flawed for this day? (Carter trades 10 lots).

Cater also sells the instant he sees +1000, he says, with no finessing of the entry. I also find that to be a loser compared to qualifying the entry. The only time I would buy into this idea is when there is a definite trend and the TICK has made a counter-trend extreme move. This DOES happen frequently at the lunch hour when volume has dropped off.

Some rules I use for RELIABLE $TICK profits:

1) As Mike said, plot a 50MA of TICK and watch the trend of it. If the MA falls below zero for more than an hour, or falls very far below, the trend has probably just changed - an early warning sign.

2) If TICK 50MA falls below zero, rises back above and then falls back again within about two hours, the trend has probably changed or will very soon. I'm not referring to a scalp trend.

3) Watch the 50MA for higher highs/lower lows for a developing trend in a very slow market where trend is hard to detect.

4) If the market has been in an uptrend, watch the market closely as the 50MA approaches zero. Many times, this is good for a pivot H/L swing trade as TICKS bounce off. Same with a a downtrend.

5) As a price trend is in force, watch for TICK divergences with price. If price is continuing down and TICKS are showing 3-4 higher lows - watch for confirmations of a market turn coming up. Something is definitely changing, but may only be temporary. Also, sometimes you will see a divergence of TICKS and the 50MA of TICKS. Another early warning sign.

6) In a range bound, decent volume day, playing TICKS brings in the money - trading both ways. 1000 is a magic number, primarily due to a self fulfilling prophecy. If you watch closely, you will see that if TICK hits +964 for example, there will be no where near the reaction to one of +1005. This is because many people have automated alerts at the 1000 levels.

7) Don't blindly jump in. Many times even as the TICK decreases substantially after an extreme, there will be one more push to new highs before falling hard. This usually sets up divergences in other indicators. Watch momentum carefully unless there's a counter-trend TICK move as mentioned above.

8) Avoid playing TICKS against the trend unless you are very experienced. You will get killed. I have seen five -1200 readings in a row (15 minutes) in a very strong downtrend.

9) If TICKS are hitting 1200 or more, be very careful. This is a strong trend and you can get killed if not careful. If you think about it, it makes sense. All the 1000 players just had to reverse!

10) In a small range, slow moving day, observe closely as TICK reaches the 800 level. To confirm that this is a good level to observe, monitor that so far, the day has been pretty much confined to +- 600. This kind of day will usually not produce 1000+ extremes. If you trade a 5 Min chart, you can use Brooks (TL break, L2, etc) to get in if the market momentum stalls, or use your other reliable momentum indicators for entry. Odds are increased substantially if the stall is around the OPEN, Day H/L, Day(-1) H/L, Floor Pivots, 50 or 200 MA or a Double High/Low.

11) If TICKS are trading in a 300-400 range around the zero line for more than two hours, STOP trading. You will only get chopped up.

12) If extremes are not being hit at all for the day, consider that maybe you should STOP trading. Move your thinking to a breakout mode on the daily chart as the daily will probably show a DOJI bar.

13) If the market is not in a runaway trend, many times the 2nd extreme hit (1000-1200) is the real one to play. This might be like a down 80 points day - not down 300.

TRIN

Set up numerical ranges as per Carter and they work pretty well. Mianly, watch for rapidly accelerating changes to give the most insight. Senters Crescendo Trade at 2.0+ is right on for the next day. On these readings, You may want to trade the after hours session to get a jump on tomorrows opening gap that usually occurs. Don't scalp, just go with the flow. Sentiment is seriuosly overdone.

Hope this helps.

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  #6 (permalink)
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hotdog View Post
$TICK and TRIN are very useful indicators, if used correctly. Unfortunately, IMO, Senters and Carter give people information that can lead to big trouble in attempting to trade these internals, especially on the TICK.

Carter speaks of shorting a +1000 TICK with a 30 point stop and 20 point profit. As mentioned earlier in this thread, this approach will kill you every time if the trend is decided UP. Same on the reverse with -1000. He stops after 2-3 losers on the day, but who wants to loser $4500 before waking up to the fact that the strategy is flawed for this day? (Carter trades 10 lots).

Cater also sells the instant he sees +1000, he says, with no finessing of the entry. I also find that to be a loser compared to qualifying the entry. The only time I would buy into this idea is when there is a definite trend and the TICK has made a counter-trend extreme move. This DOES happen frequently at the lunch hour when volume has dropped off.

Some rules I use for RELIABLE $TICK profits:

1) As Mike said, plot a 50MA of TICK and watch the trend of it. If the MA falls below zero for more than an hour, or falls very far below, the trend has probably just changed - an early warning sign.

2) If TICK 50MA falls below zero, rises back above and then falls back again within about two hours, the trend has probably changed or will very soon. I'm not referring to a scalp trend.

3) Watch the 50MA for higher highs/lower lows for a developing trend in a very slow market where trend is hard to detect.

4) If the market has been in an uptrend, watch the market closely as the 50MA approaches zero. Many times, this is good for a pivot H/L swing trade as TICKS bounce off. Same with a a downtrend.

5) As a price trend is in force, watch for TICK divergences with price. If price is continuing down and TICKS are showing 3-4 higher lows - watch for confirmations of a market turn coming up. Something is definitely changing, but may only be temporary. Also, sometimes you will see a divergence of TICKS and the 50MA of TICKS. Another early warning sign.

6) In a range bound, decent volume day, playing TICKS brings in the money - trading both ways. 1000 is a magic number, primarily due to a self fulfilling prophecy. If you watch closely, you will see that if TICK hits +964 for example, there will be no where near the reaction to one of +1005. This is because many people have automated alerts at the 1000 levels.

7) Don't blindly jump in. Many times even as the TICK decreases substantially after an extreme, there will be one more push to new highs before falling hard. This usually sets up divergences in other indicators. Watch momentum carefully unless there's a counter-trend TICK move as mentioned above.

8) Avoid playing TICKS against the trend unless you are very experienced. You will get killed. I have seen five -1200 readings in a row (15 minutes) in a very strong downtrend.

9) If TICKS are hitting 1200 or more, be very careful. This is a strong trend and you can get killed if not careful. If you think about it, it makes sense. All the 1000 players just had to reverse!

10) In a small range, slow moving day, observe closely as TICK reaches the 800 level. To confirm that this is a good level to observe, monitor that so far, the day has been pretty much confined to +- 600. This kind of day will usually not produce 1000+ extremes. If you trade a 5 Min chart, you can use Brooks (TL break, L2, etc) to get in if the market momentum stalls, or use your other reliable momentum indicators for entry. Odds are increased substantially if the stall is around the OPEN, Day H/L, Day(-1) H/L, Floor Pivots, 50 or 200 MA or a Double High/Low.

11) If TICKS are trading in a 300-400 range around the zero line for more than two hours, STOP trading. You will only get chopped up.

12) If extremes are not being hit at all for the day, consider that maybe you should STOP trading. Move your thinking to a breakout mode on the daily chart as the daily will probably show a DOJI bar.

13) If the market is not in a runaway trend, many times the 2nd extreme hit (1000-1200) is the real one to play. This might be like a down 80 points day - not down 300.

TRIN

Set up numerical ranges as per Carter and they work pretty well. Mianly, watch for rapidly accelerating changes to give the most insight. Senters Crescendo Trade at 2.0+ is right on for the next day. On these readings, You may want to trade the after hours session to get a jump on tomorrows opening gap that usually occurs. Don't scalp, just go with the flow. Sentiment is seriuosly overdone.

Hope this helps.

HotDog,

Thanks for the reply and useful info. I agree with you about the TTM folks. I'm not real satisfied with them at all. I was a member of theirs for a while, bu drop it after I began to realize the TTM business is more important to them than anything. They come across as nice guys and they probably are, but I feel there is a conflict of trying to make revenue via the business and packaging it at trading education.

The futures.io (formerly BMT) forum as more value than the TTM guys IMO.


I will review your post in detail.

David

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  #7 (permalink)
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This author uses NYSE cumulative ticks as one of the tools to trade eminis:

A cumulative solution to an age-old problem - Undesignated - Futures Magazine

A lot more examples were given in his book (2nd ed). The charts of the book is available at:

Book

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The Tick is an additional source of information, so it adds a new dimension to trading index futures. Rather I like to use the tick than other price based indicators. I use the $Tick in the following ways:


(1) SMA(30) as a trendfilter on a 1 min chart. This is the most important application of $Tick. It is a second judgement of trend based on market depth.

(2) I do not use the traditional +1000/+1000 indication for overbought or underbought. I have replaced this with a fixed channel around the moving average. So if the trend is up, and the SMA(30) of the tick is around +300, I use a tick indication of -600/-700 as a with trend entry. I would be careful to short the $Tick at 1.300.

(3) I do not watch the tick, but have coded sound alerts that indicate overbought and oversold conditions. I always consider exiting a long position, when hearing an overbought alert and exiting a short position, when hearing an oversold alert, but first try to understand, whether the alert was triggered by a breakout or a climax type situation. $Tick is a correlation indicator, and if it reaches an extreme it indicates a buy or sell program, because ES moved up or down too far versus the underlying.

(4) You can also enter positions on $Tick, if the market is rangebound, buit I try to avoid trading during these times altogether.

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Fat Tails View Post
The Tick is an additional source of information, so it adds a new dimension to trading index futures. Rather I like to use the tick than other price based indicators. I use the $Tick in the following ways:


(1) SMA(30) as a trendfilter on a 1 min chart. This is the most important application of $Tick. It is a second judgement of trend based on market depth.

(2) I do not use the traditional +1000/+1000 indication for overbought or underbought. I have replaced this with a fixed channel around the moving average. So if the trend is up, and the SMA(30) of the tick is around +300, I use a tick indication of -600/-700 as a with trend entry. I would be careful to short the $Tick at 1.300.

(3) I do not watch the tick, but have coded sound alerts that indicate overbought and oversold conditions. I always consider exiting a long position, when hearing an overbought alert and exiting a short position, when hearing an oversold alert, but first try to understand, whether the alert was triggered by a breakout or a climax type situation. $Tick is a correlation indicator, and if it reaches an extreme it indicates a buy or sell program, because ES moved up or down too far versus the underlying.

(4) You can also enter positions on $Tick, if the market is rangebound, buit I try to avoid trading during these times altogether.

Hello Fat Tails and anyone else reading this,

I am also interested in studying the $tick. Does anyone know if indicators are available for Ninja to monitor the $tick as mentioned by Fat Tails?

Specifically a fixed channel around a moving average (Point 2) and a similar indicator with sound alerts as per Point 3.

Thanks in advance.

Neil

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Market Wizard
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NeilVee View Post
Hello Fat Tails and anyone else reading this,

I am also interested in studying the $tick. Does anyone know if indicators are available for Ninja to monitor the $tick as mentioned by Fat Tails?

Specifically a fixed channel around a moving average (Point 2) and a similar indicator with sound alerts as per Point 3.

Thanks in advance.

Neil

Have something here, simply have not had the time to make it postable. It is not yet optimized. You can also overlay the indicator below on a tick chart and enter the alert levels manually. But then it is not an adaptive channel.


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